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Bank Start-Ups ~ anybody buy 'em? bought 'em?
Old 08-22-2007, 11:23 AM   #1
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Bank Start-Ups ~ anybody buy 'em? bought 'em?

Being a bank stock holder and having watched my family's fortunes flourish due to a late 1950's bank stock purchase, I have (over the past 5 years) purchased a few shares in each of two new local start-up banks.

One of the banks has already been listed on the OTCBB, the other is only now completing its 2nd year in business and continues to grow nicely while catering to local businesses. I think that I heard/read somewhere that they had to complete two years in business prior to applying to be listed on any exchange....correct??....Brewer??....anyone??

I understood understand that any trading market will be thin for some time and I TRULY bought these for the long haul ~ 15-20 years.....but got to wondering if others on this board may have had a similar opportunity over the years!!??....experiences??....stories??.....life lessons!??
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Old 08-22-2007, 12:10 PM   #2
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I've bought one, a bank partially owned by some family friends. I bought in the initial offering and then re-upped a few years later when they did a rights offering. Kept the position small, since it is very illiquid and somewhat speculative.

The bank itself has executed reasonably well on their plan. They need to make some money, but the real juice is in opening branches and building up a deposit base. They have been squeezed a bit by the inverted yeld curve like most retail banks, but still do OK. No dividends and I don't expect any. I imagine that some day they will sell out to a larger competitor, but since they are still opening branches I think it will be a while.

Many of these guys do not file SEC statements, so you have to go to FDIC: Federal Deposit Insurance Corporation if you want financials to look at. Make sure you are comfy with the insiders and the business strategy before you buy, since you will have little protection (aside from banking regulators) and little liquidity. My bank is listed OTC (SHRC), but trades rarely and strangely.

Frankly, there are so many large, established institutions selling at decade lows right now, I would just buy a quality larger bank that is exchange listed, unless you have some special reason to do otherwise.
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Old 08-24-2007, 07:25 PM   #3
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Quote:
Originally Posted by VaCollector View Post
One of the banks has already been listed on the OTCBB, the other is only now completing its 2nd year in business and continues to grow nicely while catering to local businesses. I think that I heard/read somewhere that they had to complete two years in business prior to applying to be listed on any exchange....correct??....Brewer??....anyone??
NASDAQ, NYSE, and AMEX all have different listing standards, but my best guess is that the securities of a local bank [especially start-up bank] will likely be quoted on the OTCBB or Pink Sheets they're quoted anywhere. Since market makers apply to quote securities on the OTCBB and PS [not the Issuer's], it's up to the MM if they want to quote a security.

There is no "2 year" rule when it comes to quoting securites on the OTCBB and Pink Sheets. MM have to show FINRA [f/k/a NASD] that they have gathered all the information required by SEC Rule 15c2-11 about the Issuer before they can quote a security on either the OTCBB and Pink Sheets. For banks, the bank just has to be current with all required filings with its appropriate Federal banking agency or State bank supervisor for their securities to be quoted on the OTCBB. For example, the common stock of an FDIC reporting bank can be quoted on the OTCBB soon after it has completed its IPO.

hth
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